The KPC Group moved a step closer to acquiring four Southern California hospitals owned by Verity Health with approval from a federal bankruptcy court Wednesday.
The KPC Group, which is the parent company of KPC Health that operates seven hospitals in Southern California, secured the winning bid at $610 million for St. Francis Medical Center in Lynwood, St. Vincent Medical Center in downtown Los Angeles, Seton Medical Center in Daly City and Seton Coastside in Moss Beach as well as St. Vincent Dialysis Center in downtown Los Angeles. California Attorney General Xavier Becerra must approve the acquisition.
As part of the agreement, the KPC Group has agreed to make employment offers to substantially all employees at these facilities and keep the main service lines open, according to the news release.
"KPC remains very optimistic about the future of these hospitals, their employees, and the value they bring to delivering quality health care to many California communities," Peter Baronoff, CEO of KPC Health and managing director of the KPC Group, said in prepared remarks.
"Today's court approval of the sale means we are one step closer to finalizing a smooth and orderly transition for Verity's remaining hospitals and assets to a buyer who will maintain Verity's core mission," Rich Adcock, CEO of Verity Health, said in prepared remarks. "We're pleased that these important institutions will continue providing local communities with the high-quality care they need and deserve."
In addition to the Verity Health facilities, the KPC Group is also acquiring seven long-term acute-care hospitals and two skilled-nursing facilities located in Arizona, Kansas, Louisiana, Mississippi, Texas and Utah, which will bring its network to 20 facilities.
Verity filed for bankruptcy in September, succumbing to more than $1 billion in bond debt and its unfunded pension liability as well as necessary improvements to its aging infrastructure.
Private investment firm BlueMountain Capital Management bought the six-hospital system from the financially encumbered Daughters of Charity Health System in late 2015, when it changed its name to Verity Health. BlueMountain pledged to invest up to $260 million in exchange for a lease on its information technology assets.
Nantworks, led by controversial entrepreneur Dr. Patrick Soon-Shiong, bought its stake in July 2017 and infused another $148 million in capital as Soon-Shiong eyed a testing ground for his precision medicine endeavors.
The health system has been bleeding about $175 million a year, according to bankruptcy filings.
Santa Clara County completed its $235 million acquisition of Verity's other two hospitals, O'Connor Hospital in San Jose and St. Louise Regional Hospital in Gilroy, in March. Becerra tried to temporarily block the deal, attempting to restore conditions of its sale related to continued operation of 24-hour emergency care, reproductive services, and participation in the Medi-Cal and Medicare programs, among others. A U.S. District Court ultimately sided with the bankruptcy court, ruling that Becerra did not have authority over the sale.